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New tax law presents opportunities, if you are careful

Posted
Wednesday, January 10, 2018 3:34 pm

Kevin M. Smith
Special to Colorado Community Media

The major tax overhaul by Congress means immediate changes in how some people file their taxes this season.

Fran Coet, founder of Westminster-based Coet2 CPAs, has some advice to navigate the changes. The main thing she emphasizes is to not be in a hurry to file. She said it saves time and money to not refile if there is an error.

“Slow down and get it right the first time,” Coet said.

It can be easy enough to make an error anyway, but with the changes in the law it can be even easier to overlook something, she said.

“The simple returns got a lot simpler … the ones that were complicated before are extremely complex now,” Coet said.

Medical

The floor for claiming medical expenses has dropped to 7.5 percent from 10 percent of income.

“That’s actually a taxpayer friendly provision,” Coet said.

She said anything required to mitigate poor health — including taking aspirin for arthritis if recommended by a doctor — can be claimed on taxes, however, voluntary medical expenses like nutritional supplements cannot be claimed.

“Taxpayers may want to take the time to add up their out-of-pocket medical (expenses),” Coet said.

Costs associated with things like smoking cessation can be claimed.

“The definition for medical is very broad,” Coet said.

Children

“They need to take seriously how their withholdings will be computed,” Coet said.

She said the “exemption allowances” now just reads as “allowances” on the W4 form and there is a larger child tax credit for larger incomes.

Business expenses

Coet said business capital purchases are also 100 percent deductible now, depending on when the purchase was made. For example, if a business owner bought a truck for the business and it was purchased after mid-September of 2017 then the entire cost could be claimed on taxes.

Charitable giving

The standard deduction for donations — including in-kind and cash gifts — to nonprofit organizations is increasing.